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From Banking and Finance Law Daily, January 12, 2015

Bipartisan coalition supports disparate impact standard in fair housing cases

By Lisa M. Goolik, J.D.

Representative Maxine Waters (D-Calif), Ranking Member of the Financial Services Committee, along with the American Civil Liberties Union, the National Fair Housing Alliance, and a bipartisan coalition of 22 other former and current Members of Congress, have submitted a congressional amicus brief in support of the disparate impact standard under the Fair Housing Act in the case of Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. The brief argues that the use of the disparate impact standard in FHA actions is well-settled law and in line with Congress’s intent when it enacted, and later amended, the FHA.

Well-settled law. A disparate impact claim may be pursued when a policy that appears to be objective or neutral leads to results that disproportionately affect a protected group. The brief states that it has been well settled that that disparate-impact claims may be brought under Section 804(a) of the FHA. According to the brief, all eleven federal circuits have weighed the issue and have determined that the disparate impact standard applies under the FHA. The Department of Housing and Urban Development and the Department of Justice, which enforce the FHA, have also interpreted the FHA to permit disparate-impact claims.

Moreover, the brief argues that the FHA’s sponsors and Members of Congress intended to include disparate-impact claims when the law was enacted in 1968. “As the Act’s sponsors put it at the time: By outlawing all the ‘manifold and insidious ways in which discrimination works its terrible effects,’ the Act aimed to ‘undo’ the ‘patterns of racial segregation’ in housing that had developed over time, often as a result of practices that were ‘facially neutral in themselves but ha[d] profound racial effects.’”

In addition, when the FHA was amended in 1988, nine of the federal circuits had held that disparate-impact claims were recognized under the FHA. Congress did not express disagreement with the consensus or alter the standard, the brief points out. Rather, Congress added three exemptions to the FHA that were premised on the availability of disparate-impact claims.

In response to the argument that the FHA should no longer be read to authorize disparate-impact claims because doing so “raises serious constitutional questions” under the Equal Protection Clause, the brief argues that any constitutional concerns are “purely hypothetical” and should only be raised based on the facts of a particular case. The brief notes that the concern has not been raised in any other disparate-impact case under the FHA since its enactment in 1968.

The American Dream. In a press release, Waters stated, “I sincerely hope that the Supreme Court will make the right decision in this case by affirming that the Fair Housing Act unequivocally prohibits actions that have the effect of disproportionately denying housing to marginalized communities. Failure to do so would be contrary to congressional intent; it would overturn decades of major progress in fair housing; and would be particularly devastating for minority individuals and communities.”

Waters added that “[a]ccess to housing is a cornerstone of achieving the American Dream and an important part of our national economy. Central to achieving that Dream has been the disparate impact standard under the Fair Housing Act, which allows courts to hold defendants liable for the discriminatory effects of its actions.”

The case is scheduled for argument on Jan. 21, 2015.

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